June 2021: Marker Guidance: Unit 3
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June 2021: Marker Guidance: Unit 3
The marking rubric and guidance is published as an aid to markers, to indicate the
requirements of the examination. It shows the basis on which marks are to be
awarded by examiners. However, candidates may provide alternative correct
answers and there may be unexpected approaches in candidates’ scripts. These
must be given marks that fairly reflect the relevant knowledge and skills
demonstrated. Where a candidate has advanced a point that is not included within
the marking rubric please do make a note of the same so that it can be raised at
the standardisation meeting.
Mark schemes should be read in conjunction with the published question paper and
any other information provided in this guidance about the question.
Before you commence marking each question you must ensure that you are familiar
with the following:
þ the requirements of the specification
þ these instructions
þ the exam questions (found in the exam paper which will have been emailed
to you along with this document)
þ the marking rubric
The marking rubric for each question identifies indicative content, but it is not
exhaustive or prescriptive and it is for the marker to decide within which band a
particular answer falls having regard to all of the circumstances including the
guidance given to you. It may be possible for candidates to achieve top level
marks without citing all the points suggested in the scheme, although the marking
rubric will identify any requirements.
It is imperative that you remember at all times that a response which:
þ differs from examples within the practice scripts; or,
þ includes valid points not listed within the indicative content; or,
þ does not demonstrate the ‘characteristics’ for a level
may still achieve the same level and mark as a response which does all or some of
this.
Where you consider this to be the case you should make a note on the script and
be prepared to discuss the candidate’s response with the moderators to ensure
consistent application of the mark scheme.SECTION A (all compulsory – 40%)
Question 1: Identify and discuss the formalities that must be complied with
when an individual or organisation engages with a solicitor to
provide legal services.
Total Marks Attainable 10
Fail = 0-4.9
Pass = 5+
Merit = 6+
Distinction = 7+
Indicative Content Marks
Required: Candidates should identify the formalities that must be Up to 3 marks
complied with when a solicitor provides legal services, e.g:
A pass must refer
The formalities: The relationship between a solicitor and their client is to the formalities
subject to general contract law, as well as various regulatory that must be
requirements. Solicitors should ensure at the outset that the scope complied with in
and limits of the retainer are clear. This will help parties to the order to have a
agreement understand what services are being requested and retainer
delivered, and the limitations of what has been agreed.
SRA Standards and Regulations: Contain a number of codes and
rules with provisions relevant to your relationship with the client.
Candidates should be credited for a discussion on the formalities in Up to 6 marks
relation to retainers, e.g:
To achieve more
A retainer is: The business agreement between solicitor and client, it than a pass,
serves as the right to payment & is fundamental to the recovery of candidates must
costs. Where there is no retainer there is no entitlement to charge. not simply cite
The law implies that the contract of the solicitor upon a retainer in law but should
the action is an entire contract to conduct the action till the end. show a greater
With entire contracts an interim statute bill cannot be rendered depth to their
before the end of the contract, other than in contentious work knowledge base
where it can be rendered by agreement or at a natural break. and apply the
authority to the
Form of retainer: A contract requires agreement, the intention to question posed
create legal relations, and consideration. Can be in writing, made
orally, or implied by conduct Can be in writing, made orally, or
implied by conduct. For a valid contract or retainer the courts will
look objectively to see if there is an agreement.
Credit the use of any authority cited in relation to the form and
content of a retainer e.g: J H Milner & Son v Percy Bilton Ltd [1966],
Underwood, Son v Piper Lewis [1894], Adams v London ImprovedMotor Coach Builders [1921], Groom v Crocker [1939], Abedi v
Penningtons (a firm) [2000] and Parrott v Etchells [1839].
Specific Formalities: Some agreements must follow specific
formalities, such as a CFA which must satisfy all of the conditions
applicable to it to be enforceable. A CFA needs to be in writing, it
must not relate to proceedings which cannot be the subject of an
enforceable conditional fee agreement. It must comply with such
requirements (if any) as may be prescribed by the Lord Chancellor.
The wording of such an agreement is also important.
Credit the use of any authority cited in relation to specific formalities
of a retainer, e.g: Section 58(3) of the Courts and Legal Services Act
1990, Section 58(3)(b) of the Courts and Legal Services Act 1990,
Section 58(3)(c) of the Courts and Legal Services Act 1990, Section
58(4) of the Courts and Legal Services Act 1990, Hailey v Assurance
Mutuelle Des Motards (unreported) March 2015 and Woods v
Chaleff [2002].
Termination: For a solicitor to terminate a retainer there must be
good cause and reasonable notice must be provided. Good cause
may include the client's failure to make a payment on account of
costs although this will only amount to good cause if the amount
sought is reasonable. It is not reasonable that a solicitor should
engage to act for an indefinite number of years, winding up
estates, without receiving any payment on which he can maintain
himself. Conflict of interest/Professional embarrassment may also
amount to good cause, where there is suspected duress or undue
influence and a Solicitor is not confident the client is giving
instructions freely they can cease to act. If a solicitor wrongfully
terminates the retainer, he is not entitled to be paid. Where a
solicitor terminates a retainer unreasonably he may not be entitled
to payment even on a quantum meruit basis. Reasonable notice
will be case sensitive. Where reasonable notice has not been given
there will be no entitlement to payment.
Credit the use of any authority cited in relation to the right to
terminate a retainer e.g: Section 65 (1)&(2) of the Solicitors Act 1974,
Re Romer & Haslam [1893] 2 QB 286, Re Jones [1896], Wild v
Simpson [1919] 2 KB 544, Warmingtons v McMurray [1936], Wong v
Vizards (a firm) [1997], Hilton v Barker Booth & Eastwood [2005],
Richard Buxton (Solicitors) v Huw Llewelyn Paul Mills-Owens & Law
Society (intervener) (Second Appeal)[2010] and Gill v Heer Manak
Solicitors [2018].
Candidates should be credited for any discussion on the SRA Up to 6 marks
standards and regulations, e.g:
To achieve more
SRA Code of Conduct for Solicitors, RELs and RFLs: Solicitors should than a pass,
only act for clients on instructions from the client, or from someone candidates must
properly authorised to provide instructions on their behalf. The not simply citeservice provided should be competent and delivered in a timely law but should manner. Solicitors should not act where there is a conflict of interest show a greater and must keep client’s information confidential. Solicitors should depth to their also have a complaints procedure and notify client’s as to how knowledge base they may complain and how the complaint will be managed. and apply the Solicitors should ensure that clients receive the best possible authority to the information about how their matter will be priced and, both at the question posed time of engagement and when appropriate as their matter progresses, about the likely overall cost and any additional costs that may be incurred. Credit the use of any authority cited in relation to the SRA Code of Conduct for Solicitors, RELs and RFLs, e.g: Rule 3.1 of the SRA Code of Conduct for Solicitors, RELs and RFLs, Rule 3.2 of the SRA Code of Conduct for Solicitors, RELs and RFLs, Rule 6.1 and 6.2 of the SRA Code of Conduct for Solicitors, RELs and RFLs, Rule 6.3 of the SRA Code of Conduct for Solicitors, RELs and RFLs, Rule 8 of the SRA Code of Conduct for Solicitors, RELs and RFLs and Rule 8.7 of the SRA Code of Conduct for Solicitors, RELs and RFLs. SRA Code of Conduct for Firms: Firms must have effective governance structures, arrangements, systems and controls in place to ensure that the firm and its managers and employees comply with all the SRA’s regulatory arrangements, as well as with other regulatory and legislative requirements. Firms must keep and maintain records to demonstrate compliance with your obligations under the SRA’s regulatory arrangements. Firms should only act for clients on instructions from the client, or from someone properly authorised to provide instructions on their behalf. The service provided should be competent and delivered in a timely manner. Firms should not act where there is a conflict of interest and must keep client’s information confidential. Credit the use of any authority cited in relation to the SRA Code of Conduct for Firms, e.g: Rule 2.1 of the SRA Code of Conduct for Firms, Rule 2.2 of the SRA Code of Conduct for Firms, Rule 4.1 of the SRA Code of Conduct for Firms, Rule 4.2 of the SRA Code of Conduct for Firms, Rule 6.1 and 6.2 of the SRA Code of Conduct for Firms, Rule 6.3 of the SRA Code of Conduct for Firms and Rule 8 of the SRA Code of Conduct for Firms. SRA Transparency Rules: These rules require firms authorised by the SRA to provide certain information about the cost of various legal services offered by a firm, details of the firm’s complaints handling procedure, and key regulatory information. SRA Accounts Rules: Set out the SRA requirements for when firms and sole practitioners authorised by the SRA receive or deal with money belonging to clients, including trust money or money held on behalf of third parties. The rules apply to authorised bodies, their
managers and employees. They only apply to licensed bodies in
respect of activities regulated by the SRA in accordance with the
terms of their licences.
Question 2: Discuss how the law in relation to Solicitors’ liens has evolved, if
not changed considerably, over the past decade.
Total Marks Attainable 10
Fail = 0-4.9
Pass = 5+
Merit = 6+
Distinction = 7+
Indicative Content Marks
Required: Candidates must explain what a lien is and the distinction Up to 3 marks
between the types of lien, e.g:
To achieve a pass
A lien is: A right to keep possession of property belonging to candidates must
another person until a debt owed by that person is discharged. have explained
the difference
A solicitor with unpaid fees has a potential lien over the client’s between the
property in one of three ways: Common law lien, an equitable lien types of lien
or a statutory lien under section 73 of the Solicitors Act 1974.
Common law lien: Retaining – this is the right to hold property
already in possession. it is a lien that can only exist where the party
claiming the lien has property in their hands over which they can
assert a claim, and in respect of which they have a right to keep.
Equitable lien: Preserving – the equitable lien arises in cases where
funds do not pass into the solicitor’s hands and so the solicitor does
not have the basic ‘possession’ required in order for a common law
lien to arise. The court has an equitable jurisdiction to intervene to
protect the solicitor’s interests and to order that a payment is made
to the solicitor direct.
Section 73 of the Solicitors Act 1974: Solicitors have the right to
apply to the court for a charge on any property recovered or
preserved through their efforts.
Required: Candidates must explain what has changed, e.g: Up to 3 marks
Changes: What amounts to property for the purpose of a common To achieve more
law lien, the type of contractual arrangements that can support an than a pass,
equitable lien and whether there needs to be proceedings or if candidates must
ADR will suffice. not simply cite law
but should show a
Property for the purpose of a common law lien: The definition of greater depth to
property has been extended to cover money held on client their knowledge
account unless the money held is held for a specific purpose. base and applyHowever, electronic data is not tangible property so no lien arises in the authority to
respect of the same. the question
posed
The type of contractual arrangements that support an equitable
lien: A conditional fee agreement places sufficient contractual
liability on a client to pay a solicitors fees to give rise to the right for
an equitable lien.
Proceedings or ADR: There is a requirement that there must be
proceedings in order to have the right to a preserving or statutory
lien, however if a matter settles through ADR before the issue of
proceedings then the right will arise. However, it has recently been
held that where a firm helps a client write a letter of claim or
complete an online form and the claim is paid directly to the client
in response then the firm is not entitled to an interest in the
compensation that equity would protect. This final point is currently
being appealed.
Candidates may explain in more detail what a retaining lien is and Up to 3 marks
demonstrate knowledge of how it operates, e.g:
To achieve more
A retaining (common law) lien: Is passive and possessory, there is no than a pass,
right to actively enforce the demand just a right to withhold candidates must
possession. not simply cite law
but should show a
Credit should be given where reference is made to authority on the greater depth to
nature of retaining liens, e.g: Bozon v Bolland [1839] and Barrett v their knowledge
Gough Thomas [1951] base and apply
the authority to
Property: An example of the property they may have in their
the question
possession is the file of papers, solicitors are entitled to hold the
posed
papers until his fees are paid. This lien only extends to the client’s
own property, any paper belonging to a third party cannot be
subject to such a lien. The property over which such a client is
exercised must have come into the solicitor’s possession through
employment and the work done on behalf of the client. The
property over which such a client can be exercised may include
money held on client account unless the money held is held for a
specific purpose. Electronic data is not tangible property so no lien
arises in respect of the same.
Credit should be given where reference is made to authority on
retaining liens and the type of property, e.g: Sheffield v Eden [1878],
Leo Abse and Cohen v Evan G Jones Builders Limited [1984],
Loescher v Dean [1950], Withers v Rybeck [2011] and Withers v
Langbar [2011] and Your Response v Datateam Business Media
[2014].
Candidates may explain in more detail what a preserving lien is Up to 3 marks
and demonstrate knowledge of how it operates, e.g:A preserving (or equitable) lien is: A right to ask the court to order To achieve more
that personal property recovered under a judgment obtained with than a pass,
the solicitor's assistance stand as security for his costs. candidates must
not simply cite law
Honest and fair dealing: An equitable or preserving lien exists but should show a
because there should be honest and fair dealing, it is more in the greater depth to
nature of equitable relief to prevent the Solicitor from being their knowledge
deprived of his costs, rather than a lien. Authority sets out that a lien base and apply
may exist to prevent defendants dealing directly with their lay the authority to
opponents resulting in the opponent solicitors not being paid. the question
posed
Notice: If a paying party has notice of solicitor’s interest and pays
lay opponent direct may have to pay again. A party with notice of
the solicitor's preserving lien is not under an obligation, following a
settlement as to costs, to pay any settlement monies directly to the
solicitor. However, he might be liable to the solicitor if both of the
following apply he had knowledge of the existence of the lien and
there is evidence of collusion with the solicitor's client to defeat the
lien.
Credit should be given where reference is made to authority on
honest and fair dealings and notice of unpaid fees, e.g: Welsh v
Hole [1779], Read v Dupper [1765], James Bibby Ltd v Woods and
Howard [1949], and Khans Solicitors v Chifuntwe and SSHD [2012]
Security or charge: The equitable lien operates by way of security or
charge. A preserving lien can only be asserted in respect of the
costs debt that relates to the property recovered. It does not
attach to all forms of property but may offer wider protection than
a retaining lien, in that it covers property not in the solicitor's
possession and provides him with an equitable right to have the
property transferred into his possession and to apply to the court for
a charge.
Credit should be given where reference is made to authority on
security or charge, e.g: Barker v St Quinton [1844] and Euro
Commercial Leasing v Cartwright & Lewis [1995].
To apply: A solicitor must have been instructed, there must be fees
owed as a result of the instruction, the property over which they are
claiming the lien must have been recovered or preserved and that
must have been as a result of the proceedings.
Proceedings: Historically it was thought there must be proceedings
in order to have the right to a preserving lien, however, there does
not need to be proceedings. For example, if the matter settled
through ADR the solicitor would still have the right to make an
application to the court. The rationale for this is that modern day
litigation, and the existence of the protocols, encourages parties to
settle before the need to litigate. However, very recently it has
been decided that where a firm helps a client write a letter of claimor complete an online form and the claim is paid directly to the
client in response then the firm is not entitled to an interest in the
compensation that equity would protect. This final point is currently
being appealed.
Credit should be given where reference is made to authority on an
application and the issue of proceedings, e.g: Halvanon Insurance
Co Ltd v Central Reinsurance [1988], Gavin Edmonson Solicitors Ltd
v Haven Insurance Co Ltd [2018] and Bott and Co v Ryanair [2019].
Candidates should explain what a statutory lien is and demonstrate Up to 3 marks
knowledge of how it operates, e.g:
To achieve more
Section 73 of the Solicitor Act 1974: This section replaces various than a pass,
earlier statutory provisions to the same effect going back least as candidates must
far as the Attorneys and Solicitors Act 1860. It adds to the two not simply cite law
common law remedies by giving a solicitor a right to apply for a but should show a
charging order. The courts have stressed that the effect of the greater depth to
section is not to create any new right, but rather to give statutory their knowledge
aid to the existing common law liens. In other words, enabling them base and apply
more cheaply and speedily to enforce a right they already possess. the authority to
However, the section is expansive in at least one respect: it extends the question
to a charge over real property, which the common law rights do posed
not.
To apply: Solicitor can apply to the court for a lien over property,
the provisions are similar to that in Halvanon. The court may declare
the solicitor is entitled to a charge on any property recovered or
preserved through his instrumentality for his assessed costs in relation
to that suit, matter or proceeding. A solicitor must also be able to
make out a prima facie case that they will not be paid unless an
order is made. The Court may also make such orders for the
assessment of those costs and for raising money to pay or for
paying them out of the property recovered or preserved as the
court thinks fit. Costs belong to the client so any application under
section 73 must be prompt.
No absolute right: Section 73 does not confer an absolute right to a
charging order. The court has a discretion and, like the equitable
lien, it may be waived where a solicitor takes alternative security for
his costs without expressly preserving those rights.
Credit should be given where reference is made to authority on the
statutory lien, e.g: Shaw v Neale (1858), Harrison v Harrison [1883],
Re Born [1900], Re John Morris [1908] and Kahn Solicitors v Secretary
of state [2013].Question 3: Explain why, since the abolition of the recovery of success fees,
there has been debate regarding conditional fee agreements
entered before 1 April 2013.
Total Marks Attainable 10
Fail = 0-4.9
Pass = 5+
Merit = 6+
Distinction = 7+
Indicative Content Marks
Candidates should set out what a CFA is, what led to the abolition of Up to 3 Marks
the recoverability of success fees and why the 1 April 2013 is
important, e.g
Conditional fee agreements (CFAs): A CFA is an agreement with a
person providing advocacy or litigation services which provides for
his fees and expenses, or any part of them, to be payable only in
specified circumstances. A CFA provides for a success fee if it
provides for the amount of any fees to which it applies to be
increased, in specified circumstances, above the amount which
would be payable if it were not payable only in specified
circumstances. References to success fees, in relation to a CFA, are
to the amount of the increase.
Recoverability of Success Fees: When CFAs were introduced in 1990
additional liabilities were not recoverable inter partes. However, the
relevant legislation was amended to allow for those to be
recovered. This improved uptake of CFAs however that position was
reversed by legislation which took effect on the 1 April 2013.
Relevance of 1 April 2013: If a CFA is dated after 1 April 2013 then
the success fee will not be recoverable from the losing party unless
it relates to a matter that falls under a number of limited exceptions
provided for in the transitional arrangements.
Credit should be given where reference is made to authority on
CFAs, success fees and the changes, e.g: Section 27 Access to
Justice Act 1999, Section 29 Access to Justice Act 1999, Section 44
of the Legal Aid, Sentencing & Punishment of Offenders Act 2012,
Section 46 of Legal Aid, Sentencing & Punishment of Offenders Act
2012.
Candidates should set out one or more areas of debate regarding Up to 4 marks
conditional fee agreements entered before 1 April 2013, e.g:
To achieve more
Circumstances when a CFA may need to be transferred: Much of than a pass,
the debate has been around where a CFA has needed to be candidates must
transferred. There are a number of situations when a CFA may have not simply cite
needed to be transferred. A firm may have gone into law but should
administration, closed or closed a department. A solicitor may have show a greatermoved firms and the client wanted to retain the same agreement. depth to their
A firm may have been bought by another firm or have merged. A knowledge base
firm may change its name. and apply the
authority to the
Transfer from legal aid to CFA: Two events coincided at the question posed
beginning of 2013 which resulted in solicitors, acting for claimants
whose claims were funded by legal aid, advising their clients to
switch to CFA/after-the-event (ATE) funding. These were the
reduction in scope for recovery of additional liabilities and the
scope of public funding available under legal aid contracts
changing.
Uplift on damages: From 1 April 2013, there was a 10% increase in
general damages for non-pecuniary loss (ie pain and suffering, loss
of amenity, physical inconvenience and discomfort, social discredit
or mental distress). This applies regardless of whether a claim is
brought in contract or tort. The increase implemented a
recommendation of Lord Justice Jackson, aimed at assisting
claimants to meet the additional costs and risks arising from the
abolition of the recoverability of additional liabilities.
Candidates could have expanded on the debate on transferring a Up to 4 marks
CFA, e.g:
To achieve more
Key debate on transferring a CFA: It was thought that there must be than a pass,
assignment to maintain the ability to collect a success fee from a candidates must
losing party in relation to work done after 31 March 2013 when the not simply cite
CFA gets transferred after that date. This is now not the case, there law but should
must be assignment or novation and not a termination to recover show a greater
additional liabilities and first solicitors’ costs. Assignment should be depth to their
distinguished from novation. knowledge base
and apply the
Definition of assignment: The agreement between one of the authority to the
original parties and a new party. It does not create new rights but question posed
transfers existing rights under a contract from one party to another.
(Two parties, in writing, by deed, same agreement, client not
involved but can accept/reject, benefit and burden must pass).
Definition of novation: Where parties to the original contract agree
with a new party that the original agreement comes to an end and
a new agreement comes into being between one of the original
parties and the new party, in relation to the same subject matter
and on the same terms. (Tri party agreement, client involved,
different agreement, only benefit passes).
Credit should be given where reference is made to authority on the
transfer of CFAs, e.g: Halsall v Brizell [1957], Jenkins v Young Brothers
Transport [2006], Davies v Jones [2009], Budana v Leeds Teaching
Hospitals [2016], Webb v Bromley [2016], Jones v Spire Healthcare[2016], Budana v Leeds Teaching Hospitals NHS Trust [2017] and
Roman v Axa Insurance [2019].
Candidates could have set out areas of debate on changing from Up to 3 marks
legal aid to a CFA, e.g:
To achieve more
Case specific as to whether reasonable or unreasonable to switch: than a pass,
There are circumstances where it has been held to be reasonable candidates must
to switch funding and cases where it has been held to be not simply cite
unreasonable. Some cases the 10% uplift had not been considered, law but should
or the client had not been advised of the same, and in some show a greater
claimants had been given advice on funding that exaggerated the depth to their
disadvantages of remaining with legal aid funding whilst not taking knowledge base
into account the disadvantages of entering into a CFA. and apply the
authority to the
Reasonableness of the decision: Where funding arrangements have question posed
changed what matters is the reasonableness of the decision to
change funding which inevitably highlights the actual reasons for
the change. If an alternative method of funding was entered into,
which was not, on its face, more attractive or had more
advantages than the previous method of funding, then
consideration had to be given to the circumstances and reasons
for such a switch in funding. The reasons should be contained within
the advice provided to the claimant when the funding
arrangement changed.
Credit should be given where reference is made to authority on the
the change of funding from legal aid to a CFA, e.g: Milton Keynes
Foundation Trust v Hyde, Arianna Ramos v Oxford University
Hospitals NHS Foundation Trust [2015], Oliver Davis v Wiltshire Primary
Care Trust [2016], Hyde v Milton Keynes NHS Foundation Trust [2017],
Surrey v Barnet and Chase Farm Hospitals NHS Trust [2018], AB v Mid
Cheshire Hospitals NHS Foundation Trust, XDE v North Middlesex
University Hospital NHS Trust [2020].
Candidates could have expanded on the debate on uplift, e.g: Up to 1 marks
Application of the uplift: Initially the Court of Appeal announced To achieve more
that the increase would apply to all cases where judgment was than a pass,
given after 1 April 2013 but this meant that for defendants where candidates must
CFAs were entered into before 1 April 2013 and judgment was not simply cite
given after that date they would still, potentially, be liable for the law but should
costs of the additional liabilities together with having to pay an show a greater
additional 10% increase in general damages. This position was depth to their
amended and the increase applies where judgment has been knowledge base
given after 1 April 2013, except where the claimant entered into a and apply the
CFA before 1 April 2013 and therefore the success fee continues to authority to the
be recoverable from the defendant. question posedCredit should be given where reference is made to authority on the
uplift, e.g: Simmons v Castle [2011] and Simmons v Castle [2012].
Question 4: Explain how the relaxation of common law rules has led to the
growth of the litigation funding market in England and Wales.
Total Marks Attainable 10
Fail = 0-7.4
Pass = 7.5+
Merit = 9+
Distinction = 10.5+
Indicative Content Marks
Candidates should set out what is meant by litigation funding, e.g: Up 3 marks
The main funding options available today for litigation are: To achieve a
Conditional fee agreements (CFAs), damages-based agreements pass candidates
(DBAs), after the event (ATE) insurance and third-party funding. should apply
their knowledge
Litigation funding: May also refer to, or can be another name for, to the question
third party funding. set and identify
what is meant by
Conditional fee agreements (CFAs): A CFA is an agreement with a
person providing advocacy or litigation services which provides for litigation funding.
his fees and expenses, or any part of them, to be payable only in
specified circumstances. A CFA provides for a success fee if it
provides for the amount of any fees to which it applies to be
increased, in specified circumstances, above the amount which
would be payable if it were not payable only in specified
circumstances. References to a success fee, in relation to a CFA,
are to the amount of the increase.
Damages-based agreements (DBAs): A DBA is an agreement
between a person providing advocacy services, litigation services
or claims management services and the recipient of those services
which provides that the recipient is to make a payment to the
person providing the services if the recipient obtains a specified
financial benefit in connection with the matter in relation to which
the services are provided. A DBA will also provide that the amount
of that payment is to be determined by reference to the amount of
the financial benefit obtained.
After the event (ATE) insurance: Is a type of commercially available
insurance policy which provides coverage for legal costs, subject to
an agreed limit of indemnity. It can be used as a tool by which a
party to litigation or arbitration may limit its liability for the opposing
party’s legal costs in the event that it is unsuccessful in its case.
Third-party funding: Third party funding is an alternative method of
litigation funding where a commercial funder provides the financialresources to enable litigation or arbitration cases to proceed. The
litigant obtains all or part of the financing to cover its legal costs
from a private commercial litigation funder, who has no direct
interest in the proceedings. In return, if the case is won, the funder
receives an agreed share of the proceeds of the claim. If the case
is unsuccessful, the funder loses its money and nothing is owed by
the litigant.
Candidates should be credited for a discussion on how Up to 4 marks
arrangements where a lawyer or third party may have a direct
financial interest in the outcome of proceedings were prohibited, To achieve a
e.g: pass candidates
need to explore
Control and free decision making: Historically funding arrangements why and how the
where a lawyer or third party may have a direct financial interest in litigation funding
the outcome of proceedings were prohibited because of the market was
influence that a funder, or lawyer, may have on the decisions of the restricted.
litigator. Today, agreements tend to be structured so that the client
retains full control over the way in which the action is conducted.
Maintenance: is said to be the procurement, by direct or indirect
financial assistance, of another person to institute, or carry on or
defend the civil proceedings without lawful justification.
Champerty: Occurs when the person maintaining another stipulates
for a share of the proceeds of the action or suit. May be described
as aggravated maintenance.
Credit should be given where reference is made to authority on
champerty and maintenance, e.g: Chitty 28 Ed Vol 1 17 – 054, British
Cash & Parcel Conveyors v Lamson. Store Service Co [1908], Re
Trepca Mines (No 2) [1963] and Wallis v Duke of Portland [1797].
Credit should be given for a discussion on the change of attitude Up to 6 Marks
towards funding and how new types of funding have been
introduced or emerged, e.g: The question
requires
The criminal offences and torts of champerty and maintenance candidates to
were abolished: However, Agreements may still be unenforceable consider the
on the grounds of public policy. Therefore, outside of statutory common law
provisions, the common law continues to apply. Today, to amount developments.
to maintenance or champerty, a funding agreement must disclose To achieve more
an element of impropriety, such as wanton or officious meddling, than a pass,
disproportionate control or profit, or a clear tendency to corrupt candidates must
justice (e.g. there is a temptation to inflame damages). not simply cite
law but should
Credit should be given where reference is made to authority on the show a greater
abolition of champerty and maintenance, e.g Section 13 of the depth to their
Criminal Law Act 1967, Section 14 of the Criminal Law Act 1967 knowledge base
and apply theNew funding arrangements have been introduced: In the 40s authority to the government funding became available for litigation which question posed. suggested a shift in attitude towards the use of funding from outside parties for litigation. In the 1990s CFAs were expressly permitted by statute, these agreements would have historically been deemed champertous. At the same time availability of government funding was restricted. Uptake of use of CFAs was lower than expected which resulted in additional liabilities becoming recoverable inter partes. This position was then reversed as the CFA became the most normal way of funding personal injury and clinical negligence matters. At the same time DBAs, a new form of contingency fee agreement was permitted by statute. Uptake of DBAs has been slow. Credit should be given where reference is made to authority on the change of arrangements that became available for funding litigation, e.g The Legal Aid and Advice Act 1949, Section 58 of the Courts and Legal Services Act 1990, Sections 27 and 29 of the Access to Justice Act 1999, Sections 44 and 46 of the Legal Aid Sentencing and Punishment of Offenders Act 2012, Section 45 of the Legal Aid Sentencing and Punishment of Offenders Act 2012, The Damages–Based Agreements Regulations 2013 and Zuberi v Lexlaw Limited [2021]. The change of attitude to Third Party Funding: Third Party funding has been permitted in limited situations since as early as the 19th Century, e.g in matters arising out of insolvencies. Over time it was also accepted that this type of funding could be used to fund experts providing the party remained in control of the litigation. As the courts started to give tacit approval to this type of funding more generally, a cap on the liability of third-party funders was introduced. This limited the costs liability of funders to the amount they had provided by way of funding. Credit should be given where reference is made to authority on the change of approach towards Third Party Funding, e.g: Seear v Lawson (1880), Factortame 2002, Akin v Borchard Lines Ltd & Ors [2005], Merchant bridge & Co Ltd & Another v Safron General Partner 1 Ltd [2011] and Excalibur Ventures LLC v Texas Keystone Inc & Ors (Rev 2) [2014]. The current attitude towards Third Party Funding: In more recent times the courts have found the climate and changing attitudes to litigation funding means these funding agreements may not offend public policy. It has also since been decided that third party funders could be liable to the full extent of the claimant's costs and that the cap on liability is not a point of principle that has to be followed. There has recently been a clear indication that the ban on CFAs in other matters, such as family, should not be read across
to third-party litigation funding and that these agreements may be
permitted for use in family proceedings.
Credit should be given where reference is made to authority on the
current approach towards Third Party Funding, e.g: JEB Recoveries
LLP v Linstock [2015], Davey v Money [2019], Chapel Gate Credit
Opportunity Master Fund Ltd v Money & Ors [2020], Akhmedova v
Akhmedov & Ors [2020] and Nosworthy v Royal Bournemouth &
Christchurch Hospitals NHS Foundation Trust [2020].
Association of Litigation Funders: Established in 2011, they have a
voluntary code of conduct.
Credit a discussion on any other point that may have affected the Up to 2 Marks
litigation funding market, e.g:
To achieve more
Success fees and premiums have now ceased to be recoverable: than a pass,
So litigation funding by a third party may be a more attractive candidates must
option in some cases. not simply cite
law but should
Access to Justice: Alternative funding arrangements will provide
show a greater
claimants with the resources to be represented by highly
depth to their
experienced solicitors and counsel. There are limits on the
knowledge base
availability of third party funding with a minimum size of claim, most
and apply the
litigation funders will fund is approximately £350,000. There needs to
authority to the
be sufficient damages available to make the time and effort
question posed
invested worth it.
Some uncertainty: Restrictions on champerty and maintenance still
remain. Courts decide on the facts of each litigation funding
agreement whether the contract is unenforceable on the grounds
of public policy. Piecemeal development. However, there is now an
industry wide initiative to develop model funding documentation,
launched by the London office of US law firm Brown Rudnick.
SECTION B (choice of 3 out of 5 – 60%)
Question 5: You work as an in-house Costs Lawyer for an SRA regulated
firm, Butlers Law, located in Bristol. The firm specialises in
clinical negligence, private client and commercial litigation.
You have been asked to work on the file of Mrs Tremors.
Mrs Tremors had undergone a caesarean section at a
hospital operated by the Defendant, North Bristol NHS Trust, in
March 2017. Complications arose. In due course Mrs Tremors
instructed your firm and issued proceedings against theDefendant. At all stages the claim for damages was expressly
limited in value to £50,000. Liability was disputed.
There was a Costs Management Conference before HHJ
Thompson on 19 September 2019. Amongst other things the
parties were, by the Judge’s Order, given permission to rely
upon their updated costs budgets as presented and
modified at the hearing. The total, including both incurred
costs and estimated future costs, being put forward on behalf
of Mrs Tremors for time costs and disbursements came to
£167,000. The Judge recorded no comment on the figure
relating to incurred costs, which amounted to some £108,000
of the £167,000. No appeal was sought to be made against
the Judge’s Order.
Shortly before the trial fixed for October 2020 the case was
settled. The Defendant agreed to pay the Respondent
£20,000, together with costs on the standard basis.
You have now prepared a bill of costs of £147,000 and are
about to commence detailed assessment proceedings. You
require approval of the bill from Mrs Tremors and provide
advice on the next steps in the detailed assessment
proceedings and what she can expect to happen up to, and
including, the Detailed Assessment Hearing.
Prepare the body of a letter to Mrs Tremors enclosing the bill
of costs and setting out the next steps in proceedings.
Total Marks Attainable 20
This mark should be awarded to candidates whose papers fail to address any of the
up to
Fail requirements of the question, or only touch on some of the more obvious points
9.9
without dealing with them or addressing them adequately.
An answer which addresses MOST of the following points: contents of a bill of costs,
details as to how detailed assessment is commenced, next procedural steps (PODs,
Replies and negotiations) and the request for the hearing. Candidates will
Pass 10+
demonstrate a good depth of knowledge of the subject with good application and
some analysis having regard to the facts, although the candidate may demonstrate
some areas of weakness.
An answer which includes ALL the requirements for a pass (as set out above) PLUS
candidates will demonstrate a very good depth of knowledge of the subject.
Candidates may discuss authority for assessment and may also refer to provisional
Merit 12+
assessment although they may also make the observation that they do not know
what the total costs included in the bill are. Most views expressed by the candidate
should be supported by relevant authority.An answer which includes ALL the requirements for a pass and merit (as set out
above) PLUS the candidate’s answer should demonstrate a deep and detailed
knowledge of law in this area and an ability to deal confidently with relevant
Distinction 14+ authority in respect of the procedure. The candidate will provide an excellent body
of an email setting out the procedure in detail with excellent reference to relevant
authority. Work should be written to an exceptionally high standard considering the
response will have been drafted in examination conditions.
Fail = 0-9.9
Pass = 10+
Merit = 12+
Distinction = 14+
Indicative Content Marks
Required: a discussion on the commencement of assessment Up to 2 Marks
proceedings, e.g:
Detailed/Provisional Assessment: Takes place at conclusion of
proceedings. Detailed assessment proceedings are commenced by
the receiving party serving on the paying party notice of
commencement in the relevant practice form; and a copy of the bill
of costs. The receiving party must also serve a copy of the notice of
commencement and the bill on any other relevant persons specified
in Practice Direction 47. The period for commencing detailed
assessment proceedings is within 3 months of the event that gives rise
to entitlement.
Credit reference to the citation of any authority cited on
commencement of assessment proceedings, e.g: 44.6, CPR 47.1, CPR
47.6 (1), CPR 47.6 (2) and CPR 47.7.
Credit a discussion regarding the bill of costs and the right to recover Up to 7 Marks
costs e.g:
To achieve more
The electronic bill: In October and November 2017 CPR 47 and the than a pass,
Part 47 Practice Direction were amended to provide that in all CPR candidates must
Part 7 multitrack claims (except where the proceedings are subject not simply cite law
to fixed costs or scale costs, the receiving party is a litigant in person but should show a
or the court has otherwise ordered) bills of costs for costs recoverable greater depth to
between the parties must, for all work undertaken after 6 April 2018, their knowledge
be presented in electronic spreadsheet format, capable of base and apply
producing essential summaries and performing essential functions the authority to the
compatible with Precedent S, annexed to the Part 47 Practice question posed
Direction.
Essential Information: A bill should start with the full title of the
proceedings, the name of the party whose bill it is and a description
of the order for costs or other document giving the right to detailed
assessment. The title page should include prescribed information as
to VAT. The bill should then give some background information about
the case. Then the bill should incorporate a statement of the status ofthe fee earners in respect of whom profit costs are claimed, the rates claimed for each such person and a brief explanation of any agreement or arrangement between the receiving party and his legal representatives which affects the costs claimed in the bill. It is then convenient to divide the paper into several columns headed as follows: item number, date and description of work done, VAT, disbursements, profit costs. Sometimes it is necessary or convenient to divide the bill containing the actual items of costs into separate parts, numbered consecutively. In each part of a bill all the items claimed must be consecutively numbered and must be divided under such of the heads of costs as may be appropriate. The final part of the bill of costs should contain such of the prescribed certificates as are appropriate to the case and then the signature of the receiving party or his legal representative. Credit reference to the citation of any authority cited on the form and content of a bill of costs, e.g: CPR 47 PD para 13.3, CPR 47 PD para 5.7, CPR 47 PD para 5.8, CPR 47 PD para 5.9, CPR 47 PD para 5.10, CPR 47 PD para 5.11, CPR 47 PD para 5.12-22 The indemnity principle and retainer: The indemnity principle simply provides that the receiving party cannot recover more costs from the paying party than he himself would be liable to pay his own solicitors. The retainer is fundamental to the right to recover costs. Where there is no retainer there is no entitlement to charge, there is no business relationship. A retainer must be enforceable in order to charge the client and recover costs inter partes. The indemnity principle does not apply in certain circumstances e.g. legal aid. This does not appear to be a situation where the indemnity principle will not apply. Signature on the bill is sufficient to show that the indemnity principle has not been breached. However, if a genuine issue is raised by the paying party then the court is likely to consider this. Credit reference to the citation of any authority cited on the retainers and the indemnity principle, e.g: JH Milner v Percy Bilton [1966], Scott v Hull and East Yorkshire Hospitals NHS Trust [2014] and Bailey v IBC (1998). Discussion on next procedural steps e.g: Up to 9 Marks Points of dispute: The paying party and any other party to the To achieve more detailed assessment proceedings may dispute any item in the bill of than a pass, costs by serving points of dispute. The period for serving points of candidates must dispute is 21 days after the date of service of the notice of not simply cite law commencement. Only items specified in the points of dispute may but should show a be raised at the hearing, unless the court gives permission. The RP greater depth to may file a request for a DCC if the 21 days (or relevant period) has their knowledge expired and the RP has not been served with any POD. base and apply
Credit reference to any authority cited on points of dispute, e.g: CPR the authority to the 47.9 (1), CPR 47.9 (2), CPR 47.14 (6), CPR 47.9 (4), Edinburgh v question posed Fieldfisher LLP [2020] and Ainsworth v Stewarts Law LLP [2020]. Default Costs Certificates: The RP may file a request for a DCC if the 21 days (or relevant period) has expired and the RP has not been served with any POD. Application for requesting a DCC is on Form N254. Will include an order to pay costs to which the DCC relates. Sum payable is set out in PD (£80 fixed costs plus court fee). Credit reference to any authority cited on default costs certificates, e.g: CPR 47.9 (4), CPR 47.11(1), CPR 47.11(2), CPR 47.11(3), CPR PD 47 para 10.7, Masten v London Britannia Hotel Ltd [2020], National Bank of Kazakhstan & Another v The Bank of New York Mellon & Ors [2021], Gregor Fisken Ltd v Carl [2021], Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] Replies: Where any party to the detailed assessment proceedings serves POD, the RP may serve a reply on the other parties to the assessment proceedings. RP may do so within 21 days after being served with the POD to which the reply relates. Replies must be limited to points of principle and concessions only, must not contain general denials, specific denials or standard form responses. When practicable replies must be set in the form of Precedent G. Credit reference to any authority cited on replies, e.g: CPR 47.13 (1), CPR 47.13(2), CPR PD 44, 12.1 and CPR PD 47, 12.2. Request for a Hearing: RP must file request for DA Hearing within 3 months of expiry of period for commencing DA proceedings. N258 needs to be filed plus NOC, Bill, Order/Judgment/Doc giving right to DA, Precedent G PODS and Replies, Any other orders, Fee notes and written evidence of disbursements (over £500). Statement signed by legal representative and estimate of the length of time the DA hearing will take. Court fee will also need to be paid. Credit reference to any authority cited on requesting a hearing, e.g: CPR 47.14, CPR PD 47 para 13.1, CPR PD 47 para 13.2 and CPR PD 47 para 5.2 Discussion on the assessment e.g: Up to 7 Marks Basis of Assessment and reasonableness: Court has discretion as to To achieve more costs BUT emphasis on proportionality because of the standard basis than a pass, of assessment (CPR 44.3(2) and the overriding objective). Where the candidates must amount of costs is to be assessed on the standard basis, the court will not simply cite law only allow costs which are proportionate to the matters in issue. Costs but should show a which are disproportionate in amount may be disallowed or reduced greater depth to even if they were reasonably or necessarily incurred; and resolve any their knowledge doubt which it may have as to whether costs were reasonably and base and apply proportionately incurred or were reasonable and proportionate in
amount in favour of the paying party. Where the amount of costs is the authority to the
to be assessed on the indemnity basis, the court will resolve any question posed
doubt which it may have as to whether costs were reasonably
incurred or were reasonable in amount in favour of the receiving
party. Whatever basis: Reasonableness would always be considered.
Credit reference to any authority cited on basis of assessment and
reasonableness, e.g: Section 51 of the Senior Courts Act 1981, CPR
44.2, CPR 44.3(2) and CPR 44.3(3)
Application of Proportionality: There has been uncertainty as to how
the new test or proportionality should apply. However the Court of
Appeal has now provided a degree of certainty. It Is a two stage test
and once reasonableness has been considered the Court should
remove all unavoidable costs before making any deduction to reach
a proportionate figure.
Credit reference to any authority cited on the application of
proportionality, e.g: BNM v MGN Ltd [2017], May v Wavell Group
[2016], May v Wavell Group [2017], West and Demouilpied v
Stockport NHS Foundation Trust [2020].
Assessment and good reason: Where there is no CMO in place and
the costs exceed the budget by 20% or more the receiving party
must serve a statement of reasons with the bill. CPR 3.18 is not
ambiguous. Estimated costs agreed and subject to a Cost
Management Order have already, in theory, been through a
detailed assessment. It would be going against the intent of the rule
to require another detailed assessment of estimated costs to be
performed without ‘good reason’.
Credit reference to any authority cited on assessment and good
reason, e.g: CPR 3.18, CPR PD 44, 3.2, Vertannes v United Lincolnshire
Hospitals NHS Trust [2018] and Harrison v University Hospitals Coventry
and Warwickshire NHS Trust [2017]
Question 6: You are a Costs Lawyer at a busy SRA regulated firm, Dominos and
Denton LLP, in Canterbury. You have been working on the file of
Debbie Maryland. The fee earner with conduct of the matter is
Amrit Singh. Debbie Maryland is the Claimant in a personal injury
matter. Her claim was issued in the County Court, valued at
approximately £120,000. You drafted the budget on the matter,
which was filed and served in accordance with the deadline under
the Civil Procedure Rules.
After service and filing of the budget, Amrit received medical
expert evidence in the case. Initially the case appeared to
concern a probable mild traumatic brain injury, but the evidence
now shows that Debbie had a neuropsychiatric condition, whichcaused her to become seriously disabled needing assistance from
the State in her day to day care. This meant that the value of the
claim would need to be increased to somewhere in the region of
£2.5m.
The evidence was received less than a month after the budget had
been filed and just before the budgeting hearing. A revised
schedule of loss was pleaded, but it was not feasible to seek to
revise the budget at the hearing because the impact of the new
medical evidence, other than on value, was not clear at that time.
At the hearing directions were made, budgets approved, and the
case transferred to the High Court.
You have now been asked for your advice on the matter. Amrit has
instructed that the case has turned out to be more complex than
previously anticipated. In the original budget assumptions, you had
indicated much of the disclosure had already taken place. The
assumptions state that 5 lever arch files had been disclosed. You
budgeted future costs on the assumption there would be follow up
disclosure requests and had also assumed that there was likely to
be a 4 day trial in the County Court and that 8 files would be
needed at trial. Disclosure has now grown to 10 files and it is
expected that there will be a further 10. Amrit wishes to know
whether an application should be made to amend the budget, or
if the matter is best left to be dealt with when costs are assessed.
You are required to write the body of an email to Amrit setting out
the steps that should be taken in the matter, particularly whether
an application should be made to amend the budget, or if it is a
matter best left to assessment.
Total Marks Attainable 20
An answer which deals with the basic requirements of the question but in dealing
with those requirements only does so superficially and does not address, as a
minimum, all the criteria expected of a pass grade (set out in full below). The
answer will only demonstrate an awareness of some of the more obvious issues,
for example simply outlining the rules in relation to budgets and CMOs. The
Fail up to 9.9
answer may not indicate any real understanding that costs management is in
place in order to ensure cases are managed proportionately. The answer will be
weak in its presentation of points and its application of the law to the facts. There
will be little evidence that the candidate fully understands how the CPR operates
and any view expressed will be unsupported by evidence or authority.
An answer which addresses MOST of the following points: When a CMO will be
made, how the court may approach making a CMO, what needs to be done in
Pass 10+
order to make an application to amend a budget after a CMO has been made,
what amounts to a significant development when making an application to
amend a budget, the impact of a CMO on assessment and what amounts to agood reason to depart. Candidates will demonstrate a good depth of
knowledge of the subject with good application and some analysis, although the
candidate may demonstrate some areas of weakness.
An answer which addresses ALL of the points required for a pass (as set out
above) PLUS there will be evidence that the candidate has a very good
understanding of the law in some depth but this may be expressed poorly or may
be weak in places and strong in others. The candidate is likely to have discussed
the importance of assumptions in demonstrating to the court what is a significant
Merit 12+ development is and that the current authority mainly concerns downward
departures on budgeted costs at assessment. There is likely to be some discussion
on the new procedure and therefore the uncertainty as to steps that need to be
taken. The candidate should show very good, appropriate references to the
relevant law and authority. Work should be written to a very high standard with
few, if any, grammatical errors or spelling mistakes etc.
An answer which includes ALL the requirements for a pass (as set out above)
PLUS the candidates’ answers should demonstrate a deep and detailed
knowledge of law in this area and an ability to deal confidently with relevant
principles. All views expressed by the candidate should be supported by relevant
authority and/or case law throughout. The candidate may make the link
Distinction 14+
between applications to amend and the conflict between agreed/approved
budgets. The candidate should be able to show critical assessment and
capacity for independent thought on the topic. Work should be written to an
exceptionally high standard with few, if any, grammatical errors or spelling
mistakes etc. taking into account it has been written under exam conditions.
Fail = 0-9.9
Pass = 10+
Merit = 12+
Distinction = 14+
Indicative Content: Marks
Required: An explanation as to applicability of costs budgets, how Up to 2 marks
to make an application to amend a budget and the test for
departing from a CMO on detailed assessment, e.g:
Applicability of budgets: Rules on costs management apply to all
Part 7 Multi Track with four exceptions. Purpose of costs
management is the court should manage both the steps to be
taken and the costs to be incurred by the parties to any
proceedings so as to further the overriding objective. Even where
parties do not have to file budgets the court has discretion to order
them to do so.
Credit reference to any authority cited on the applicability of
budgets and costs management, e.g: CPR 3.12 (1), CPR 3.12 (2)
and CPR 3 PD 3E, para 2.
Application to amend: Revising party must revise its budgeted costs
upwards or downwards if significant developments in the litigation
warrant such revisions.You can also read
